Passionate about IP! Since June 2003 the IPKat has covered copyright, patent, trade mark, info-tech, privacy and confidentiality issues from a mainly UK and European perspective. The team is Eleonora Rosati, Annsley Merelle Ward, Neil J. Wilkof, and Merpel. Nicola Searle is currently on sabbatical. Read, post comments and participate! E-mail the Kats here

The team is joined by GuestKats Mirko Brüß, Rosie Burbidge, Nedim Malovic, Frantzeska Papadopolou, Mathilde Pavis, and Eibhlin Vardy

Saturday, 17 February 2018

Infringement - no role for German doctrine of "deliberate selection" following Eli Lilly v Actavis, yet...

On the basis of a normal interpretation, the shear mode fell within the scope of the claims. The judge held that the requirement of tension and compression in Integer [D] was infringed by the accused Magnitone products which deployed the shear mode. L'Oreal also ran an alternative infringement argument based on equivalents. Carr J stated in respect of this argument he would have concluded that the "shear variant" produced substantially the same result in the same way and obviously so as the patent states it is the preferred arrangement. If having discussed the "shear variant" at great length, the Patentee nonetheless chose to exclude it from the claims, then the skilled person would have assumed the patentee intended to do so (possibly in light of the prior art cited in prosecution). Accordingly, in light of the third Actavis question, the variant would not be an equivalent.

RN Ventures relied on the German principle of "deliberate selection" as set out in the German Federal Court of Justice case - Okklusionsvorrichtung. This rule provides that there can be no patent infringement by equivalence if the description discloses several possibilities as to how a technical effect can be achieved, but only one of those are included within the claims of the Patent (similar to the Johnson & Johnston disclosure-dedication rule in the US). L'Oreal argued that this rule was not adopted by the UK Supreme Court.

Readers may recall that Lord Neuberger's judgment in Actavis v Lilly stated that just because anti-folates were referred to generally and the claims were limited to pemetrexed disodium, in particular, this did not mean that the patent was intending that other pemetrexed compounds would not infringe. The UK Supreme Court stated that had the patent specification not referred to anti-folates generally, but only pemetrexed disodium, then this would have been a strong indication that the patentee was intending to limit himself to pemetrexed disodium. To argue that Lilly was in somehow limiting itself on infringement by virtue of what was disclosed in the specification:

“confuses the disclosure of the specification of a patent with the scope of protection afforded by its claims. Particularly given the facts set out in para 25 above, it seems to me very unlikely that the notional addressee would have concluded that the patentee could have intended to exclude any pemetrexed salts other than pemetrexed disodium, or indeed pemetrexed free acid, from the scope of protection.”

Mr Justice Carr noted that although the parallel Actavis v Lilly decision in Germany reached the same conclusion as the UK Supreme Court, it did so by different reasoning:

"It is unnecessary for me to decide whether the German doctrine of “deliberate selection” should be applied generally to equivalents in the UK, and undesirable that I should do so, since in the present case I have concluded that there is infringement on a normal interpretation. My conclusion on equivalents is based upon a consideration of the specification of the Patent in this case, and does not establish any wider proposition."

Indeed, the AmeriKat thinks it will be a challenging for a lower court to apply such a doctrine in light of the Supreme Court's dicta in Actavis (as set out above).

Sufficiency, novelty/obviousness and amendment

Applying the principles summarized by Arnold J in Sandvik v Kennametal [2012] RPC 23, Mr Justice Carr also rejected RN Ventures classic insufficiency attack. He held that the Woog prior art did not anticipate the patent or made the patent obvious. The amendment at Integer [F] was allowed, clear and did not add matter, despite RN Venture's contentions. Although validity was attempted as a squeeze on infringement, there was not a lot of interest of law or application on these points to report.

So, valid and infringed.

Actavis v Lilly- the giftthat just keeps giving to patent law

They thought it was all over...the Barrell jurisdiction point

In England & Wales, the Court will disclose to the parties (normally through their representatives) a draft judgment under strict terms that the contents (or even a hint of the outcome) are not disclosed to anyone else. To do so would be in contempt of court. The draft is provided in order for the parties to flag any errors and typos. Judges are entitled to alter their judgment before it is formally "handed down" or made public. In light of Re Barrell Enterprises [1973] 1 WLR 19 CA. The Supreme Court, in In Re L (Children) (Preliminary Finding: Power to Reverse) [2013] UKSC 8 confirmed that a judge has jurisdiction to change his or her mind until the order carrying the judgment into effect is drawn up and perfected. The exercise of the power is not restricted to exceptional circumstances, but may include a plain mistake, the failure of the parties to draw the judge’s attention to a plainly relevant fact or point of law, the discovery of new facts after judgment was given. It is the duty of the parties' representatives, to draw such issues to the attention of the Court, but also to avoid the temptation of raising fresh arguments.

After the draft judgment was provided to the parties in this case, RN Ventures requested that Mr Justice Carr reconsider his judgment on the basis of a claimed internal inconsistency that could not be reconciled. Richard Davis, for RN Ventures, argued that throughout the case it was understood to be common ground that the accused Magnitone products were made in accordance with the embodiment where the contact elements move in unison, which Carr J held fell outside the scope of Claim 1. Accordingly, he argued that the products should be held not to infringe. L'Oreal's counsel, Tom Moody Stuart, said that was not common ground. Mr Justice Carr accepted this and said that Magnitone was seeking to run a new case not suggested at trial that the accused products fell outside of Integer [E], when at trial the Court was only told to be concerned about Integer [D]. He concluded:

"The dispute at trial concerned integer D. If, having admitted integer E, RN Ventures wished to say that this action was caused by something other than integer D (and that its products therefore operated in a manner which, according to the Patent, is inferior to the embodiments which I have held fall within the claims) then it needed to establish this by evidence. It did not attempt to do so.

In conclusion, whilst I consider that Mr Davis was right to draw my attention to this issue, and I have carefully considered it, it does not cause me to change my conclusion that the Patent is infringed."

...It is now - key takeaways

Not as greasy as some takeaways,the IPKat boxes up the lessonsof L'Oreal v RN Ventures

On the patent side of the case, there are five key takeaways from Mr Justice Carr's decision:

Construction has been rebranded as "interpretation", thus emphasizing its more flexible role when we get to assessing equivalence under the new Actavis questions (or Lilly questions, depending on who you ask) (see also Generics (t/a Mylan) v Yeda).

Take care when deciding whether to introduce prosecution history into your claim interpretation arguments. The use of prosecution history must support at least one of the two instances identified by Lord Neuberger in Actavis v Lilly. If they do not, you might be penalized on costs, as hinted by Carr J.

Be wary of any language in the specification that could be construed as disclaiming protection by the claims. Although the German principle of deliberate selection or the US disclosure-dedication doctrine have not entered into English patent law, the Court is scrutinizing the language of the specification with renewed vigor following Actavis v Lilly. [Merpel wonders if increasingly, the Courts will accept the normal interpretation advanced by patentees so they don't have to wander into the rat nest of equivalence in Actavis v Lilly...]. Note that Carr J did not say there was no and could never be a role for a deliberate selection/disclosure-dedication doctrine in English law, but that it was inappropriate for him to get into it on the basis of his findings,

Make sure your expert's report references source material, especially where extracts from that material is said to constitute the CGK or the skilled person's understanding of technical terms used in the patent.

Flesh out all of your possible non-infringement arguments so that you don't have to rely on the Barrell jurisdiction should your claim interpretation fail.

You too can get that youthful kitten glow with the use of a robust grooming regime...

What keeps the AmeriKat looking youthful and kitten-esque? A robust skin care regime of exfoliating, cleansing, brushing and, especially during these cold and dry winter months, moisturizing. When her paw brush just doesn't cut it, a key tool of her grooming repertoire is an oscillating circular electronic skin care brush. She uses a Clarisonic, but another big brand is a device called the Magnitone. It was the Magnitone that preoccupied three days of Patents Court time before Mr Justice Carr this past December and which was subject to the recent decision of L'Oreal v RN Ventures [2018] EWHC 173. Of interest to readers, the case was run in the Shorter Trial Scheme (see previous Kat post here) and applied recent case law on claim interpretation, validity, infringement and the use of prosecution history following the Supreme Court in Actavis v Lilly.

L'Oreal claimed that certain products in RN Venture's range of Magnitone devices infringed its patent - EP(UK) 1 722 699 - and Community Registered Designs - RCD Nos 000407747-001 and 001175046-001. The AmeriKat will be focusing on the patent issues in this case. GuestKat Rosie will be exploring the RCDs in a separate post.

The Patent, Skilled Person and CGK

The '699 Patent, entitled "Apparatus for acoustic/mechanical treatment of early stage acne", is concerned with a mechanical device suitable for the treatment of acne through the removal of sebum plugs (yum!) from skin pores. The person skilled in the art who would be interested in the development of such a device, have a mechanical engineering background and an interest in dermatology, with such interest including the understanding of the basis properties of the skin and well known-treatment of acne (or would know which textbooks to look in). The CGK would not include a working understanding of electronic grooming devices in other areas - such as electronic toothbrushes and pedicure brushes - as the technical considerations and mode of actions were quite different in other fields.

The Patent's disclosure

The goal of the invention is to keep the pore openings in an "opening state" to allow the continuing exudation (fluid emission) from the sebaceous gland. This, in turn, is said to help the maintenance of an aerobic state within the pore and will prevent the development of more severe acne conditions. In order to keep the pores open, the device supplies energy to the skin to loosen and remove the sebum plugs. It does this by applying tension/compression in opposite directions (i.e. differential motion), sequentially, on the skin at different frequencies. The differential motion needs to be at a high enough amplitude to create pore opening forces, but low enough to minimize stretching of collagen in the skin. This results in the plugs being loosened and removed from their position in the skin pores.

One way of achieving this tension, is to have one skin-contacting element staying still, while another skin-contacting element nearby moves up and down - thus creating "shear". This was called the "shear aspect" in the patent (and is referred to later as the "shear mode"). Another arrangement was described the "tension/compression element" - whereby two skin-contacting elements stay still, while another skin-contacting element moves right or left away from and towards the fixed elements. It is also possible to combine these two modes to crate an elliptical motion. Another embodiment provides that a single set of skin-contacting elements move in the same direction, relying upon the skin's inertia/elasticity to produce shear force - although this is noted not to be as effective. Other configurations that employ bristle tufts organized in rows, but using the same general motion as above, are described in the patent. The patent summarizes the invention as:

“[0086] Thus, the present invention provides either mechanical energy in a shear mode or tension/compression mode or a combination (elliptical) in order to loosen the adhesion between the sebaceous plug and the walls of the pore. Said motion can be produced by contact elements moving either reciprocally linearly, reciprocally arcuately or a combination thereof.”

Claim 1

As split into integers Claim 1 is set out below. All integers, save for [D], were admitted to be possessed in the accused Magnitone products. Integer [F] was the proposed amendment.

“[A] An apparatus for treatment of acne, comprising:

[B] at least two contacting elements having end faces, wherein at least one contacting element is a moving contacting element;

a mounting assembly for holding the contacting elements substantially adjacent to each other; and

an assembly for reciprocally moving said at least one moving contacting surface;
characterised in that

[C] all of the end faces are in the same plane and the end faces of the moving contacting element move in a single plane

[D] and said assembly reciprocally moves said at least one moving contacting element bi-directionally through a neutral positionrelative to at least one adjacent contacting element to produce alternating tension and compression of the skin

[E] wherein when the apparatus is positioned so that the end faces of the contacting element contact the skin, an action on the skin in the plane of a skin area to be treated for acne is produced to remove sebum plugs from skin pores, permitting ready removal thereof from the skin

[F] wherein the frequency of movement of the moving contacting element is within the range of 80-200 Hz.”

Henry loved when he was in "shear mode"

Claim "Interpretation" - it is all about what you say and disclaim

With the old "Construction" heading now replaced with "Interpretation", Mr Justice Carr stated he would be applying

But, probably for good reason, Carr J did not set about summarizing that case law in the judgment.

There were three issues on the claim interpretation of Integer [D]:

1. "Relative" movement - skin contacting elements

L'Oreal argued that "neutral position" refers to the neutral or relaxed position of the skin and pores between two contact elements and that the "relative movement was between the contact elements and the skin. RN Ventures argued that "neutral position" meant the starting or rest position of the contact elements and that the relative movement was between the contact elements themselves. If the contact elements were stationary relative to each other, such an arrangement would fall outside of [D]. Carr J accepted RN Ventures interpretation on the basis that integer [D] required at least one contacting element to move relative to at least one adjacent contacting element and that the patent itself acknowledged that an arrangement where the contact elements moved in unison was not as effective. Further "neutral position" was described in the patent as being when the movable contact element was in the rest position. The judge noted that:

"Purposive interpretation does not allow the language of the claim to be disregarded. The Patentee’s purpose in choosing this language is, as indicated in the Patent, to exclude an arrangement which is generally not as effective as that which is claimed."

2. "Relative" movement - bristles

RN Ventures argued that the relative movement of skin contacting elements with bristles meant that the relative movement had to be at the base of the contact elements, not at the skin-contacting end (i.e. top of the bristles). RN Ventures argued that Integer [D] related to the mounting assembly and thus was concerned with the base of the contact elements. Carr J rejected this on the basis that Integer [D] relates to the movement of the contact elements "so as to produce the alternating tension and compression of the skin" and no statement was made that the movement had to be at the base. He stated:

"The tips of the contact elements, which touch the skin, are the “business end” of the claimed device. Where there is a difference in the behaviour of the base and the tip of the contacting elements, it would not be consistent with the Patentee’s purpose, nor fair to the Patentee, to disregard movement of adjacent contact elements which produces the claimed effect."

3. "Tension and compression"

RN Ventures argued that movement to produce "alternating tension and compression", as described by Integer [D] excludes the shear mode. L'Oreal said that this confuses mechanical movement with the effect of a mechanical movement. Integer [D], argued L'Oreal, plainly referred to the effect of the mechanical movement and thus did not exclude the shear mode. The first question for the judge was what the technical meaning of "tension and compression" and "shear", as used in the patent, would have been understood by the skilled person having regard to the inventor's purpose. The expert for RN Ventures sought to given expert evidence on this, but on cross-examination the definition he used turned out to be taken from Wikipedia (see the judge's comments at [15]-[20]).

L'Oreal's expert stated that "shear mode" would be understood to be subject to alternating tension and compression as the moving element would push the skin in front of it upwards (compression) and would pull the skin behind it (tension). The pore in between the moving element and the stationary element would be deformed either in tension or compression. RN Ventures' expert disagreed, but had exhibited an article to his report that stated shear forces on skin have the effect of "stretching and compressing the skin" [reminding everyone of the litigation adage - exhibit in haste, repent at leisure...].

The judge therefore accepted L'Oreal's meaning of "alternating tension and compression". He further held that the shear mode was not excluded from the scope of claim. In support he pointed to the fact that the patent described and preferred the shear mode embodiment to the tension and compression arrangement. Further the effect of the shear mode arrangement described in the patent was to cause "tension and compression". The judge also held that the inventive concept of the patent was not confined to this mode as expressed by the summary of the invention (see [86] above). Importantly, on claim scope, the judge stated that:

"I accept that not everything in the specification necessarily falls within the claims, and I have applied this principle to the arrangement in [0060] – [0062], which the Patent states is “generally not as effective.” However, this does not mean that the Patentee’s preferred arrangement should be excluded from the claims, which would be the result of RN Ventures’ interpretation. The document must be read as a whole and exclusion of all of the preferred embodiments would not be a sensible reading. Nor would it accord with the inventor’s purpose. It would neither be fair to the Patentee, nor provide reasonable certainty to the public."

RN Ventures tried to argue that the shear mode was "an aspect" and thus, in EPO practice, this meant that the shear mode was outside of the claimed invention. But without any authority or guideline, and without the prosecution history being admissible, the argument did not get very far.

How foggy is the patent and will the prosecution historymake it "unambiguously" clear?

Prosecution history - the exception, not the rule

RN Ventures tried to argue that during prosecution L'Oreal had limited Claim 1 to the tension/compression mode in order to support inventive step. The Examiner noted the distinction between the tension/compression mode and the shear mode, requiring that subsidiary claims to the shear mode be deleted. This, RN Ventures argued, indicated that the Examiner had gained the impression that L'Oreal was choosing to exclude the shear mode and if this was not case, L'Oreal should have explained this to the Examiner, rather than approving the text of the patent to be granted.

Lord Neuberger in Actavis v Eli Lilly stated that the UK Court's approach to prosecution history is "skeptical but not absolutist" and that reference to the file history would only be appropriate in two instances. First, where an issue is "truly unclear" on the reading of the patent and the file history "unambiguously resolves" the point. Secondly, where it would be contrary to the public interest for the prosecution history to be ignored (i.e. where, during prosecution, the patentee had argued the patent did not extend to a variant which the patentee then later says infringes).

Mr Justice Carr did not consider that the first instance applied. He did not think there was anything that was "truly unclear" and there was no statement in the file history that amounted to a clear disclaimer of the shear mode and the effect of the amendment was to the effect of the of the mode on the skin, rather than the mode itself. Further, not all claims directed to shear mode were deleted. The second instance also did not apply. The judge noted that interpretation is a matter for the national courts, not the Examiner and L'Oreal was not under a duty to correct any misunderstanding on the part of the Examiner on the scope of the claims. The judge warned that:

"It should be emphasised that reference to the prosecution history is the exception, and not the rule. I understand why it was relied upon in the present case, although I have not accepted RN Ventures’ submissions about it. Parties should think carefully in future before incurring additional costs in arguing about the prosecution history."

"Judges accustomed to trying cases of this nature are rightly somewhat suspicious of evidence obtained in this way [via surveys], for so much can depend upon the conditions in which surveys are conducted, the format of the questions posed and the manner in which they are asked."

The concerns noted by Lord Oliver in Reckitt & Colman Ltd v Borden Inc [1990] 1 All E.R. 873 have remained at the forefront of the judicial mind and whilst they have come in and out of vogue over the years, they are now accepted as a necessary evil in at least some circumstances.

The survey question was recently considered in Glaxo Wellcome UK Ltd (t/a Allen & Hanburys) & Anor v Sandoz Ltd & Ors [2017] EWHC 3196 (Ch). This trade mark and passing off claim concerns the colour and shape of the Seretide combination asthma inhalers. See earlier IPKat posts here and here. Although the case is not "hot off the press" it is nevertheless an important development to share with the IP community.

The trade mark
[the survey concerned the darker purple]

The passing off portion of the case is essentially a get up claim which focuses on the use of the colour purple for inhalers.

Two surveys regarding the primary purple Pantone (2587C) on the inhalers was admitted into UK IPO opposition proceedings (which are now stayed). As the survey had already been carried our and considered by the parties, the question in this application was can the survey evidence be relied upon in the High Court proceedings.

The surveys were added to the opposition proceedings as evidence of acquired distinctiveness. Likewise in the High Court, the Claimant wished to rely on them in the High Court in relation to their case on distinctiveness (and not as evidence of confusion).It is clear from Interflora 1 (Interflora v Marks and Spencer[2012] EWCA Civ 1501) and Interflora 2 (Interflora v Marks and Spencer[2013] EWCA Civ 319) that surveys should only be permitted if they are of "real value". This was less of an issue here as the surveys had already been carried out so as Birss J put it, this was really a case management issue.Various additional objections were raised to the surveys being included. In particular, the fact that they survey was based on a square of colour (rather than it in use on the product). This was dismissed as the colour was used on the packaging and marketing materials as well. In these circumstances, Birss J noted that "it is sensible to test it using a square of colour rather than a particular object like an inhaler or a leaflet or anything else".

Other objections included:

inadequate records of how the interviewers were trained and briefed (dismissed as a minor issue in this context which could be dealt with at trial - but not an excuse for future litigants failing to maintain adequate records);

the interviewees did not include patients (given the prescription nature of the products, focusing on GPs and pharmacists "was sensible");

the survey answers may not be truly verbatim (a question which could be tested at trial);

GPs were sampled on a per practice basis which did not consider the number of GPs at the practice (a question which could be tested at trial);

the structure of the surveys was leading ("there is an element of speculation in the questions, but the essential structure is obviously intended to minimise any leading" in any event the trial judge would be able to reach their own decision);

the additional cost - the total estimate of both sides was a further £500,000 ("an enormous sum" but nevertheless less than 10% of the costs of the proceedings and likely an over estimate of the amount of time required on cross examination).

Now in its fourth year, the More than Just a Game conference organized by Queen Mary University of London brings together academics, practitioners and industry members to discuss the key legal trends in, and issues facing, the gaming and interactive entertainment industries. For the first time, an edition of the conference is being held in Paris. KatFriends Daniel Lim,Alex Woolgar and Shohta Ueno (Allen & Overy) report on the proceedings from a rainy Paris:

"The gaming and interactive entertainment industry has come a long way since the days of Pong and Space Invaders. From 8-bit graphics and humble beginnings, the industry has become the fastest-growing of the creative industries (annual global revenues are forecast to grow from $116 billion in 2017 to $143.5 billion by the end of 2020, an annualised growth rate of almost 7.5%). The scale of, and investment in, some of the flagship game franchises rivals (and in some cases even outstrips) that of major motion picture productions: for example, the development and marketing budget of Grand Theft Auto 5 was reportedly $265 million, approximately the same as the production budget for Avengers: Age of Ultron. The proportion of the UK population that play games has increased to 49% and, when mobile gaming is included, the split between male and female players is approximately 50/50.

As the sector grows, so too does the value and importance of the industry’s IP assets. As a complex medium, with multiple software, hardware and creative components, games can raise challenging rights, infringement and licensing issues, across the range of IP rights. Additionally, the changing nature the ways in which gamers play, and how gaming companies make money from this, has attracted interest from regulators in some countries.

eSports

For those less familiar, eSports is the competitive playing of videogames, most commonly in multiplayer and/or team format. Now a sub-industry in its own right, eSports competitions now sell out arenas, offering prize money of up to $10 million for a single competition (the author wonders whether he made the right career choice). In 2017, eSports accounted for $693 million of revenue, a figure set to double by 2020; 100 million people played one game (League of Legends) monthly; and in China alone there were 11.1 billion streams of videos showing eSports events.

eSports didn’t really take off in their present form until the early 2000s, so their growth has been stratospheric. In general, this part of the industry lacks specific regulation, but its possible societal implications and fast growth rate have attracted the interest of some governments and regulators. The first session of the conference dealt with some of the relevant issues. With Anne-Sophie Uccello-Jammes (LexCase) chairing, Emmanuel Martin (SELL), Alex Rudoni (Allen & Overy), Andreas Lober (Beiten Burkhardt) and Axelle Lemaire (former Innovation and Digital Affairs Minister in the French Government), compared and contrasted the attitudes of the French and German legislature to eSports.

In 2017, France introduced specific laws to regulate eSports (by way of two decrees, here and here, implementing a more general legislative recognition of eSports in 2016). Alex pointed out that the French government had some potential ills in mind when drafting the decrees (e.g. insecure, unfair and/or excessive working practices; payment of large sums of prize money to minors; profiteering by organisers by charging entry fees in excess of organisational costs), but Axelle emphasised that the main aim was one of legitimisation. France recognised the economic status and potential of the sector in France, and sought to clear away uncertainty for interested parties by e.g. carving eSports out from the statutory definition of gambling / a lottery, and providing stability of employment (minimum term of 12 months) for professional players contracted by commercial eSports teams.

In contrast, Andreas noted that Germany does not feel specific regulation is necessary. Existing laws – media and advertising, employment, gambling, broadcasting and IP – regulate most of the key areas. The Christian Democratic Union (CDU) party has however indicated that (if a coalition is formed) it wants to promote eSports, potentially with a view to making it an Olympic sport. This will require national and global governing bodies (which, largely, do not yet exist), and clear harmonised anti-doping and anti-cheating rules. It seems however that eSports are more likely to self-regulate to achieve this aim, rather than face legislative intervention (although there may be intervention in relation to e.g. sports betting rules, and potentially immigration – unlike “traditional” sports, there are not currently special regimes in place to allow leading eSports players to travel easily to competitions).

In the second session (chaired by Alex Rudoni), Anne-Sophie, Virginie Gringarten (Ubisoft), Delphine Langlet (Electronic Arts), Stéphan Euthine (France eSports) and Jan Pommer (Turtle Entertainment) discussed IP issues relevant to eSports. Anne-Sophie noted that EU law is clear that both the whole and component parts of videogames (i.e. the software plus other elements subsisting within a game e.g. literary, artistic, musical and dramatic works) are protected by copyright, provided that they are original. Typical end-user licence agreements exclude commercial uses of such copyright works. This was not previously a serious commercial issue but, as eSports have evolved and exploded in popularity, such licence restrictions are increasingly coming into tension with the activities of both professional and amateur eSports enthusiasts. Anne-Sophie noted that it is not desirable for rightholders completely to refuse use of their games for eSports purposes, because eSports are mutually beneficial: game developers/publishers benefit from the publicity and strong community built up around competitive gaming, whilst gamers benefit from technically commercial uses of the relevant game.

Following on from this, Virginie and Delphine agreed that rightholders should draw a distinction between truly amateur, informal eSports events (which should be monitored but tolerated) and professional events (which must be licensed or prevented). The difficulty is where to draw the line in defining an event as “grassroots” or “amateur”. A combination of different factors feed into the analysis e.g.m prize money and number of players. However, there are currently no universally accepted thresholds and no single factor will necessarily be determinative, as some amateur events have very large prize funds. Thus, currently each individual rights holder (typically the game publisher) will apply their own criteria and standards to the assessment. The lack of an industry-wide standard leaves amateur eSports event organisers in an uncertain position.

Where events are truly professional, licences will typically be temporally limited (to avoid clashes between significant eSports tournaments), prevent damaging brand associations (e.g. by exclusion of certain sponsors), and contain provisions to ensure consistent and reliable events (which Jan agreed is crucial) e.g. determining responsibility for venue and infrastructure. Licences will also restrict broadcasting rights (in the form of streaming via e.g. Twitch; broadcast in public places e.g. “Meltdown” bars; interfacing within the videogame itself; and, recently, television broadcasts) to the relevant game’s rightholder. The panel appeared relatively comfortable with the status quo on broadcast rights.

Stéphan noted that eSports is a grassroots movement, and a heavy-handed approach to rights enforcement will likely stifle a market which is currently beneficial for all. He argued that the prevailing licence terms are too complex and the process takes too long (1-3 months) to be realistic for the timeline of most eSports events, and suggested standardised licence terms as a possible solution. Delphine stopped short of agreeing that standardised terms are the way forward, but suggested that Electronic Arts is working on guidelines to ensure that appropriate uses of its IP are identified and “whitelisted”. A more extreme suggestion from the audience was a collective management society. Delphine noted that this is unlikely to work in practice because of significant differences between the creative proposition and business models of game developers/publishers, and the differing terms on which they in-license IP (e.g. football league rights), if applicable."

Friday, 16 February 2018

A recent New York Times article (paywall) caught my eye - it was all about "knock off" goods on Canal Street, New York. But there was a twist, these ones were genuine.

The concept of genuine fakes is usually applied to counterfeits which, the counterfeiting salesperson claims, are so close to the original as to be virtually indistinguishable. Whilst such sales talk rarely matches the reality, there is no doubt that the quality gap between genuine and fake goods is starting to contract.

Some brand owners are taking an "if you can't beat them" join them approach to the counterfeiting. For example, Diesel recently set up shop on Canal Street where the founder, Renzo Rosso, sold out the Deisel stock in the space of a weekend. Like counterfeit goods, the Deisel goods were sold at a much lower price point and from a temporary "pop up" stall.

Diesel apparently sees some long term potential in the idea, the above logo was filed at the USPTO in early February. In fact this may be something of a fashion trend.... As the New York Times article notes, Gucci recently embraced the "Guccy" brand. In addition to their range of Guccy goods, the GUCCY mark was filed by Gucci in Italy, Brazil and as an IR in 2017.

Is this the solution to counterfeiting i.e. undermine the business model and generate new buzz for the brand at the same time. It won't work for every brand but it's a fun trend to watch take shape.

In late 2017 The IPKat reported that, after Europe, it appeared that the interplay between linking and copyright protection had re-surfaced also in the US [use of the term 're-surfaced' is justified in light of the fact that US courts have already had the chance to address these issues, eg in the well-known Perfect 10 case].After a few months, earlier this week two decisions have been issued on this matter ... with two rather different outcomes.Linking to unlicensed content Round #1: KO - Playboy v Boing BoingFirst, on 14 February US District Judge Fernando Olguin (US District Court for the Central District of California) dismissed (but with leave to amend) Playboy's complaint against Boing Boing.What is (was?) at stake here?Basically Playboy [European readers will promptly recall that indeed the landmark decision of the Court of Justice of the European Union (CJEU) in GS Media - Katposts here - was prompted by a reference for a preliminary ruling made in litigation brought by the publisher of ... Playboy] sued the owner of website Boing Boing over linking in 2016 to "Every Playboy Playmate Centerfold Ever". While the Boing Boing page is still up, the content it links to and the YouTube video it embeds have been removed.In its decision this week, Judge Olguin referred to the Tarantino v Gawker case, ie the litigation (which however never resulted in a decision) concerning the linking, by now-defunct Gawker, to the 146-page script for Tarantino's The Hateful Eight (which had the time had yet to be produced), to hold that liability for linking to unlicensed content "exists if the defendant engages in personal conduct that encourages or assists the infringement."According to the judge, Playboy failed to demonstrate convincingly that Boing Boing has supported the infringement through inducement or material contribution. Now Playboy has time until 26 February to file a second amended complaint. [why not just bringing the litigation to Europe ... or New York (see below), wonders Merpel?]

... quarterback ...

Linking to unlicensed content Round #2: Victory - Goldman v Breitbart

The plaintiff in the second linking case has been luckier than Playboy (at least so far).

A photographer working with Getty Images, Justin Goldman, sued a number of publishers over the unauthorized embedding, by their relevant publications, of a tweet containing an unlicensed image of American football quarterback Tom Brady that he had taken.

According to the complaint filed with the US District Court for the Southern District of New York, tthe defendants - by embedding content hosted elsewhere (Twitter, although the photograph had been first uploaded onto Snapchat) - had infringed the plaintiff's public display right under §106(5) of the US Copyright Act. There was no evidence that the photo had been downloaded or stored anywhere though.

According to §106(5) of the US Act, the copyright owner has the right, "in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly".

In a judgment issued yesterday, US District Judge Katherine B Forrest held that "when defendants caused the embedded Tweets to
appear on their websites, their actions violated plaintiff’s exclusive display right;
the fact that the image was hosted on a server owned and operated by an unrelated
third party (Twitter) does not shield them from this result."

The judge noted how a review of the legislative history underlying adoption of the current Act reveals that its drafters intended copyright protection to broadly encompass new, and not yet
understood, technologies.

After referring the US Supreme Court in Aereo, whose language was found "instructive", the judge turned to the server test and its application in Perfect 10. She highlighted how Perfect 10 is not really part of an “unbroken line of
authority” (as argued, instead, by the defendants).

Rather, "the Server Test has not been widely adopted. Even a quick survey reveals
that the case law in this area is somewhat scattered." In any case, according to the judge, the server test has not been adopted for the display right.

Also in Flava, the 7th Circuit did not touch upon the issue of direct liability. Nonetheless the lower court had opined that “[t]o the extent that Perfect 10 can be read to
stand for the proposition that inline linking can never cause a display of images or
videos that would give rise to a claim of direct copyright infringement, we
respectfully disagree. In our view, a website’s servers need not actually store a copy
of the work in order to ‘display’ it".

In sum, the Court sided with the plaintiff and held that "[t]he plain language of the Copyright Act, the
legislative history undergirding its enactment, and subsequent Supreme Court
jurisprudence provide no basis for a rule that allows the physical location or
possession of an image to determine who may or may not have “displayed” a work
within the meaning of the Copyright Act."

... and a few moments' rest

Finally, the judge rejected the argument that a conclusion of this kind would have 'chilling effects'. The Court held that - among other things - even assuming that the public display right is engaged in acts of linking, US law still retains "a very serious and strong fair use
defense, a defense under the Digital Millennium Copyright Act, and limitations on
damages from innocent infringement."

Comment

The decision in Goldman is very interesting and signals somewhat of an alignment between the understanding of the public display right under the US Copyright Act and the right of communication to the public under Article 3 of the InfoSoc Directive.

In addition, the decision seems to complement the conclusions of the US Copyright Office's Making Available Study. There the Office held that under existing (at that time) case law "it remains uncertain whether a court might deem certain forms of inline linking or framing distinguishable from the technology in Perfect 10 for purposes of the server
test. As will be discussed further below, application of the making available right to activities
such as these raises complex issues that require consideration of a number of important factors. While some of these issues have been addressed preliminarily, U.S. courts have not made
definitive rulings as to how the server test might apply to activities potentially raising greater
concerns for visual artists’ ability to exploit their works online than have been addressed so far."

Now, after this decision, some sort of response seems to have been provided. At least for now.

IPKat recently discussed arguments made by Professor Joseph Stiglitz and his colleagues in favor of alternatives to the current patent system for incentivizing research and innovation. Kat friend Dr. Aloys Hüttermann, of Michalski, Hüttermann & Partner in Germany, has offered his views on the topic, focusing on whether an initiative taken by the cigarette lighter industry in Wenzhou might have some lessons for the issues raised.

As recently discussed on this blog, conferring IP rights is not the only way of incentivizing innovation. Baker, Jayadev and Stiglitz have suggested that innovation can also be incentivized by offering tax subsidies or by granting prizes or award. So why is it that the patent system, with its grant of an exclusive right to the patent holder for a fixed period of time, has prevailed over other alternatives for incentivizing, primarily, prizes and awards, which already in the 19th century had been proposed by German and Swiss scholars as an alternative to patents, but at best play a minor role, if at all? Again: why does the current patent prevail?

Contrary to what Baker, Jayadev and Stiglitz write (“The patent, of course, is a prize”), a patent is usually not a prize. It is rather better conceived as something like an "option", in the sense that it does not guarantee higher revenue due to the ability to charge a higher price, but only gives the patentee a chance to do so by virtue of the granted monopoly (or, as patents for some technical sectors have been somewhat deprecatorily called by Mark Lemley and Carl Shapiro, a "lottery ticket"). But even if so, why the strong preference for patent protection in the form of conveying IP protection in favour the patentee, as opposed to having society give out awards and prizes for incentivizing research? If you ask companies, it is this blogger's impression that most would choose the latter instead of being required to make often substantial expenditures to secure such an uncertain right as IP protection, in general, and patent protection, in particular.

At first glance, the answer seems easy: It costs less - or to be precise, IP rights costs society less than providing awards or prizes. The advantage of an IP system for the state, in contrast to a price or award system (with tax subsidies also being a form of a premium system ), is that, at least initially, the burden of selecting which innovation is worth a prize is shifted from the governmental institution to the applicant. Moreover, an IP recordal system need not cost any tax money (if the patent authority is self-funded). As we know since, at least since Roman times, in the words of emperor Caracalla,"No one may have money except me and I need it to give it to the soldiers", i.e., the government's resources seemingly are always needed elsewhere.

But the issue of the limitations on the allocation of public moneys addresses only one-half of the story; economists such as Michele Boldrin and David Levine are vocal in their hostility against IP rights as being superfluous subsidies that should be abandoned. In their view, competition amongst companies is fully sufficient to ensure an adequate level of investment in productive R&D, since companies will always try to distinguish themselves from their competitors in order to achieve higher prices. Stated otherwise, "copycat capitalism" is adequate to incentivize innovation.

That this approach may be misplaced as an empirical matter can be seen by the example of Wenzhou, the "dark dubious sister" of the radiant and urban dynamo, Shenzhen. As Wenzhou emerged in the 1980's to become one of the industrial centres of Deng Xiaoping's China, Friedrich Engels would surely have observed striking parallels between it and 19th century Manchester in terms of unhindered capitalism. One product where Wenzhou developed a manufacturing stronghold was in the area of cigarette lighters. such that, by 1993, there were more than 2,000 such manufacturers in the city. However, the cigarette lighter manufacturers discovered that copycat capitalism has its downsides too, and the solution that they adopted was remarkable. Prof. Andrew Mertha (of Cornell University) writes:

"At the end of 1992, the Wenzhou Lighter Industry Association (WLIA) was established. [...] WLIA began a program to protect industry from unfair competition in which each industry association member was compelled sign an affidavit to defer to association rulingswhen applying for product design rights (i.e., de facto patents). These designs are then evaluated and published in local newspapers for comment. If nobody opposes the new design within a five-day window, the “patent” is granted. As a result, there is an IPR/Patent mechanism completely within the industry association. If there is found to be cases of infringement, the association handles it" (emphasis in the original text).

When one takes into account that a cigarette lighter is a relatively simple product, in contrast to pharmaceuticals or mobile telecommunication, it is remarkable that the actors in this industry concluded that some kind of protection was deemed to be needed, but it was provided, not by the government, but rather by the industry itself. So the WLIA system is another example of a “norm-based” system, like the system of French chefs in keeping their recipes secret. The WILA system existed quite effectively for more than a decade until, in the course of the strengthening of the IP system by the Chinese government, it was abandoned.

So to summarize:

- Some kind of innovation incentives are needed, as the example of Wenzhou tells us;

- But prizes or awards have the downside of being costly, both directly and in their administrative costs.

On the basis of the foregoing, permit me put forward a new patent definition that I have suggested:

"Patents (and designs) exist because they form an indirect system of stimulating innovation, which is low in risk and costs for the government"("Mitteilungen der deutschen Patentanwälte", 2013, 181-187).

Photo on lower left by Joe Haupt (https://www.flickr.com/people/51764518@NO2) and is licensed under the Creative Commons Attribution-Share Alike 2.0 Generic license

What happened last week on IPKat (week ending 11 February 2018)? It is never too late to find out! Serendipitously coinciding with New York Fashion Week, IPKat had news of the latest opinion on the Louboutin shoes trademark, analysis of a Ralph Lauren polo trade mark dispute, and even a mention of the current height of fashion-cool, Kanye West.

In the conclusion of another trade mark battle, Mr Justice Arnold has handed down his decision in Sky v Skykick [2018] EWHC 155: BREAKING: Sky's the limit for CJEU references in Sky v SkyKick trade mark battle. According to Mr Justice Arnold himself, "[t]he case raises important issues of European trade mark law", which necessitates references to the CJEU on issues relating to (i) bad faith for filing with no intention to use and (ii) IP TRANSLATOR clarity issues. The claimants, Sky, argued that SkyKick infringed four of their EU trade marks (a mixture of "SKY" figurative and word marks), one UK trade mark (a "SKY" word mark) and committed passing off by use of the sign "SkyKick". SkyKick argued that the marks were wholly or partly invalid on the grounds that the specifications of the goods and services lacked clarity and precision and that the applications were made in bad faith. Stay tuned to IPKat for further analysis of the decision!

IPKat is awaiting the outcome of the allocation of costs of injunctions in the UK Supreme Court Cartier case (IPKat: here). In the meantime, join IPKat in perusal of a review by Sir Richard Arnold of Martin Husovec's Injunctions against Intermediaries in the European Union: Accountable But Not Liable? (Cambridge University Press) for the Journal of Intellectual Property Law & Practice (Oxford University Press), reproduced by IPKat with kind permission of the author: Costs of intermediary injunctions: Sir Richard Arnold's review of a recent publication.

Never Too Late 181[week ending 4 February] Book review: ‘Copyright and Information Privacy: Conflicting Rights in Balance’ | A legislative initiative that merits attention: Mandatory mediation in Greece in trademark, patent and industrial designs infringement disputes | Austria refers Facebook ‘Hate-Speech’ case to the CJEU | Protection of traditional knowledge and cultural expressions: the case of 'Maasai IP' | A spectrum of specificity - Article 3(a) of SPC Regulation | Can ‘public morals’ prevent the use of religious symbols and motifs in advertising? No, says the European Court of Human Rights | BMG v Cox - when does an ISP lose its safe harbour protection? | Embrace my beloved frog, as a guardian.

Never Too Late 180[week ending 28 January] EPO revokes CRISPR patent – a clear cut case of invalid priority?|Blocking injunctions and their costs: some details of the forthcoming Supreme Court round of Cartier | When does copyright protection arise in works of applied art and industrial models and designs? A new CJEU reference | Trial sequence in SEP litigation - time for a rejig? | Bad faith confirmed for ALEXANDER trade mark application? | Is a circular logo for coffee confusingly similar to the Starbucks’ one? Yes, says the General Court | Fine-tuning the SPC Regulation; a never-ending story?

Never Too Late 179[week ending 21 January] Scents and trade marks - The EU reform of olfactory marks and advances in odour recognition techniques| French government claims back « France.com » (as trade mark and domain name) | Swedish Patents and Market Court of Appeal requests CJEU to clarify notion of ‘shape, or another characteristic, which gives substantial value to the goods’| New presidency of the Council of the European Union ... new position on the EU copyright reform? | Image rights and the unauthorized use of one's own portrait on cigarette packs| Presentation of information: Is the EPO stretching the line for patentable subject-matter, again? | Prosecution history - as relevant as any inventor evidence?".

Never too Late 178[week ending 14 January] A Merck-y appeal is remitted to the High Court | Into fashion law? Here's a call for papers for JIPLP special fashion law issue | When two minds became one (at least for a while): the collaborative genius of Daniel Kahneman and Amos Tversky | French Supreme Court in Finasteride second-medical use litigation acknowledges patentability of dosage regime claims | Alibaba released the 2017 Annual Report on Intellectual Property Protection | Córdoba - The CJEU to re-visit the Right of Communication to the Public | Swedish Supreme Court confirms that domain names constitute property that can be seized by the state | Multilateralism v Bilateralism: What’s in it for international IP regulation?

On 29 November 2017, the European Commission, in accordance with the Digital Single Market and Single Market Strategy strategies, adopted the following “package of measures to further improve the application and enforcement of IPRs, and to step up the fight against counterfeit and piracy,” by depriving “commercial-scale IP infringers of the revenue flows that make their criminal activity lucrative”, the so-called ‘follow the money’ approach:

·An evaluation report and study on the Directive on the enforcement of intellectual property rights (IPRED), which found that IPRED’s effectiveness is diminished by the different ways by which certain provisions (e.g. on injunctions, damages, and legal costs) are implemented across the various Member States.

·Overview of the functioning of the Memorandum of Understanding on the sale of counterfeit goods via the internet. This voluntary agreement (MoU) was signed in 2016 by five Internet platforms (including Alibaba, Amazon, and eBay), eight IPRs owners and six associations, with the aim to “establish a code of practice in the fight against the sale of counterfeit goods over the internet” by collecting data within two monthly periods per year (the so-called “windows”), based on certain Key Performance Indicators (KPIs). The overview presents the results of the data collected within the “windows” between 21 June 2016 and 21 June 2017, as well as the feedback given by the signatories.

The MoU on the sale of counterfeit goods via the internet, as well as forthcoming MoUs (in preparation and expected to come on board in 2019) on advertising on IP infringing websites, providers of payment services and the transport and shipping industries, complement the Guidelines for online platforms to tackle illegal content published on 28 September 2017 by the EC.

As Kat readers might recall, the Guidelines include suggestions on how to detect, remove and prevent the re-appearance of illegal content (e.g. IPRs infringement) in a swift manner, such as the suspension of accounts of repeat infringers, "public" mechanisms that do not require that a person need have an account to report illegal content (as is already implemented by some Internet platforms), a certification scheme and audit of trusted flaggers, which are entities with expertise in identifying illegal content (e.g. entities providing online brand protection services). This Kat is rubbing her paws to see whether such certification scheme will be applied (Commission Communications are not binding); if so, which requirements must be fulfilled to be considered as trusted flaggers; and whether the audit will be based on the assessment of the expected high-quality notice and takedown requests (NTD) submitted to the platforms.

The Watch-ListThe Counterfeit and Piracy Watch-List, as part of one of the measures adopted by the EU, has the aim of stepping up the fight against counterfeiting and piracy, by raising “consumer awareness concerning the environmental, product safety and other risks of purchasing” on the marketplaces identified on the Watch-List, and encouraging “their operators and owners to crack down on intellectual property abuse”.

The Watch-List will provide a description of each of the marketplaces listed and located outside the EU, which are engaged in facilitating substantial counterfeiting and piracy, “with special focus on online marketplaces”. To do so, contributions and comments from stakeholders should be submitted before 31 March 2018 here.

The publication of the 2017 Notorious Markets List (see the TechieKat's review here), and the launch of the public consultation for the Counterfeit and Piracy Watch-List, constitute clear strategies implemented by the USTR and the EC for stepping up the fight against counterfeiting and piracy. In doing so, the Lists present the following similarities:

Both pursue encouraging operators, owners, services providers, local authorities, and governments to take necessary actions and measures to reduce the availability of counterfeiting and piracy.

Both aim to raise awareness regarding the significant risks to consumer health and safety that result from counterfeiting and piracy.

Both focus on online marketplaces. The 2017 Notorious Markets List focused on illicit streaming devices (ISD), which are understood as the “combination of media boxes, set-top boxes, or other devices with piracy applications (apps) that allow users to stream, download, or otherwise access unauthorized content from the Internet”.

The online and physical marketplaces contained on the Lists are reportedly engaged in facilitating or benefiting from substantial counterfeiting and piracy.

The marketplaces are located outside their “territories”: the EU on the Watch-List and the USA on the Notorious Markets List.

Neither List constitutes a finding of legal violations “in the country or countries concerned”.

This Kat is not surprised that both Lists contain similarities, considering that they both aspire to achieve the same goal: the reduction of counterfeiting and piracy, which according to according to the EUIPO and OECD stats, constitute approximately 5% of all imports in the EU (€85 billion a year) and around €338 billion worldwide.

It is true both Lists contain almost identical wording in some parts (e.g. counterfeiting and piracy “undermine critical [EU/USA] comparative advantages in innovation and creativity to the detriment of [EU/USA] citizens/workers”; please see the relevant wording of the Watch-List here). No matter, having a Watch List that might include USA platforms can benefit the fight against counterfeiting and piracy, especially in light of the fact that some improvements were achieved after the publication of the 2016 Notorious Markets List (see the TechieKat's review here) and which might constitute a similar scenario for further publications of the Counterfeit and Piracy Watch-List.

This Kat thinks that some marketplaces are expected to be included on the Counterfeit and Piracy Watch-List, such as Alibaba platforms, despite their efforts in combating counterfeiting and piracy. However, this Kat eagerly awaits whether the USA and Latin American online marketplaces will be listed, considering that platforms, such as Amazon (see Eleonora’s report here), iOffer (here) and Mercado Libre (here), have been involved in disputes in the past dealing with counterfeit goods.

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